Industry Sector Analysis: Data Showing the Contribution of the Construction Industry to GDP Declining

Our study conducted by Mona School of Business and Management, (MSBM) in June 2017, revealed that the leaders of local construction firms perceive that public sector delays, Government procurement policy, cost of financing, and company debt burden are among the main impediments to growth of the sector. Along with policy changes, we suggest several strategies, including adoption of Lean Construction techniques to increase efficiency.

Jamaica is in hot pursuit of economic growth through the activities of the Economic Growth Council (EGC) and various initiatives in the private and public sectors.  This thrust is crucial to reduce unemployment and public debt and increase the general standard of living of citizens.  The private sector is the engine for economic growth and needs appropriate infrastructure for best results.  Construction is at the heart of infrastructure.  Studies have shown a strong causal relationship between the aggregate economy and the construction sector. (Relevant studies include, “Role of construction sector in economic growth: Empirical evidence from Pakistan economy” by R.A. Khan, (2008) published in  First International Conference on Construction in Developing Countries, August 4-5, Karachi, Pakistan, 2008 ; and “The role of construction in economic growth and development” Habitat International, 9(1), 55-70.) However, data from the Planning Institute of Jamaica (PIOJ) shows substantial decline in housing starts, construction sector employment and percentage contribution to GDP over the period 2002 to 2015 (See Figure 1 and Figure 2) In addition, Jamaica has not yet developed a fulsome strategic plan to align the construction sector with the economic growth ambitions.  

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